Question

Gain contingencies usually are recognized in a company's income statement when: Multiple Choice The gain is...

Gain contingencies usually are recognized in a company's income statement when:

Multiple Choice

  • The gain is probable and the amount is reasonably estimable.

  • The gain is reasonably possible and the amount is reasonably estimable.

  • The amount is reasonably estimable.

  • The gain is certain.

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Homework Answers

Answer #1

Answer:

The gain is certain.

Explanation:

An uncertain situation that will be resolved in future, possiby contributing to gain is called a gain contingency. Recording the recognition of gain contingency prior to the settlement of the underlying events is not allowed by Accounting Standards.

It is not to be recognized when gain is probable or reasonably probable, and also when the amount is estimable or reasonably estimable.

Therefore, the right answer is the last option:

The gain is certain.

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